Reader Mailbag: Personal Finance Isn’t an Exact Science

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Buy it for life spatula?
2. Savings question
3. Fun without spending
4. Buying and selling laptops
5. Financial independence and children
6. Teenage entrepreneurial guidance
7. 1% maintenance on houses?
8. Piracy and frugality
9. Good and Cheap
10. Evolution of Simple Dollar design

I don’t believe there are any hard and fast rules in personal finances.

There are guidelines and principles that will usually push you in the right direction. Spend less than you earn. Pay off your debts. Develop multiple income streams. If you follow those, you’ll usually do well.

Are they perfect for every situation? No. Are they good in almost every situation? Yes.

Personal finance advice is kind of like digging through a toolbox when you’re trying to fix your bike. There are one or two tools that do the job perfectly, several tools that will do the job decently, and several tools that won’t help at all.

The trick is having enough tools so that you can usually find the right one.

Q1: Buy it for life spatula?
I have enjoyed your post.

What spatula would you recommend? I know wooden ones are the best but not sure about the brand that would last for life.
– Erica

Rather than spending a lot on a spatula, my solution was to buy a very inexpensive bamboo spatula for $1 at the dollar store. My philosophy was that if it did break, it’s going to be easily biodegradable.

It turns out that this bamboo spatula takes a beating and keeps on ticking. It hasn’t broken or even shown significant wear yet, which surprises me.

If I were you, I’d just get an inexpensive bamboo spatula like this one. As I said, you can find similar ones for cheaper at discount stores.

Q2: Savings question
My new girlfriend is really financially conscious. She introduced me to your site in fact. She lives by a rule she calls the 50/30/20 rule where 50% of money should be spent on needs, 30% on wants, and 20% on savings. She’s never had any debt, so I am trying to figure out how I should categorize those. Are they needs or savings (obviously not wants)?

– Andy

Searching through the site archives, I’m pretty sure the 50/30/20 rule comes from Elizabeth Warren’s great book All Your Worth, which I reviewed quite a while ago.

In fact, that review actually answers your question:

“[I]t’s time to look at eliminating your debt. That money comes from the 20% savings portion of your monthly budget – as long as you have significant debt, you should use this 20% to eliminate it in the form of extra payments beyond the ‘must-have’ minimum payments.”

So, your minimum payments should come out of your “needs,” but extra payments should come out of your “savings.”

Q3: Fun without spending
I am struggling with finding ways to have fun without spending money (or much money). Most of the things I enjoy doing require spending money, like going to the movies or going out for drinks or going shopping with friends. Those things fill up a lot of my free time so if I just quit them it would be rough.

– Sandy

It seems like a lot of your activities are socially oriented. In other words, you like going out and doing stuff with other people.

Here’s my thought: why not just find free stuff to do with your friends? Do some research in advance and find some free stuff your group might enjoy doing. One possibility is to have friends over for drinks instead of going out for drinks or have a potluck dinner with a few bottles of wine. If you spread out the cost, it’s way cheaper.

This doesn’t mean you have to radically shift everything you’re doing, either. If your friends just shifted, say, a third of the things they do to cheaper options, you’d all save a lot of money.

Q4: Buying and selling laptops
I’m wondering if you can give me some advice on whether or not to sell my laptop. Right now, I have a five-year old laptop, which works really well. I recently paid about $40 to put in a new battery, which has extended its life a little. I have also upgraded the RAM and overall keep my laptop in condition. At this rate, even though I planned to only keep it for five years, I could see myself getting another year or two out of this laptop. I could also probably sell it.

I also have money saved up for a new laptop. Between that and the proceeds from the sale of this laptop, I could get myself a new laptop. So, if I sell this laptop right now, I can more than cover the cost of my new laptop, which I will eventually need anyway. If I wait until this one no longer works, I might not be able to sell it at all.

Here’s my question: should I sell this laptop now, when I could still get a good price for it? Or is it better financially for me to use this laptop until it no longer works, and absorb the whole cost of my next laptop?
– Glenda

My perspective on laptops is to keep using them until they no longer work or until you can no longer install key software on them. I am currently nearing the end of the life cycle on my second laptop ever – and this is dating back many, many years.

Does it do what you need it to do? If the answer is yes, keep using it. If it ever reaches the point where the answer is “no,” pass it on to someone who can get some use out of it.

I mostly use my laptop for text editing and web browsing. Since I don’t need a heavy hitter for that, I’m likely to replace mine with a $300 Chromebook. I’ll just wait until mine bites the dust and then move on.

Q5: Financial independence and children
As a parent I am hoping you might have some insight into our struggle. I am 30 my wife is 29 and we are considering having a child. However we also have a dream of financial independence and want to retire at age 50 or so and our finances are headed there. It’s a given that the child will alter that goal as a child just adds so much expense. I know you will say it is worth it but what thought process did you and Sarah go through when having kids. Did you consider how it would alter your financial plans?

– Dane

Honestly, we didn’t really have financial plans when our first child was conceived. We didn’t have the grasp on our future that we have right now. We just knew we wanted children, so we had a child.

With our second and third children, we did some serious cost-benefit math, but we were obviously swayed by our experience with the first child and our desire to have children. In fact, looking forward, we are considering adoption and adding even more children to our family.

A child is going to alter your financial plans. Period. There’s no way around that. It’s a personal decision as to whether or not that expense is worth it. I can’t answer that for you because it is deeply tied to your life goals, not mine. I consider having a child to be worth it for myself and Sarah. You have to decide for yourself.

Q6: Teenage entrepreneurial guidance
My son’s sixth grade teacher made a huge impression on him. The teacher encouraged him to spend the summer working on a large project of some kind. He wants to start an internet business making videos. Do you have any suggestions on getting started? How can he make money doing this?

– Dave

My suggestion to your son is for him to consider the kinds of videos he enjoys watching, then think about videos like that that he would find cool that don’t exist yet. That’s what he should try to make.

He should follow that up with some attempts to make videos. He should try making several of them to see what works before moving on to actually uploading them. Once he has a few uploaded, he should find ways to share them with other people who might enjoy them.

There’s a lot to learn, from video creation to promotion. The goal should not be to earn a lot of cash, but to learn what goes into making this work. He needs a core idea for what kind of videos he wants to make, then he needs to actually make those videos and post them (probably to Youtube), then he needs to find ways to promote them and attract viewers without annoying people. Each of those steps requires a particular skill set and if he’s starting from scratch, there’s going to be a lot of learning involved.

This is a great summer project. He will learn a lot and get some basics of online entrepreneurship.

Q7: 1% maintenance on houses?
Would you mind revisiting whether setting 1% of the house value annually for maintenance has been a useful/accurate rule of thumb?

You described it in this post:
– Gareth

Based on our experiences with this home and based on my parents’ experience with their home, 1% is just about right. I’d probably up it to 1.5% or so if a home is below the $100,000 mark.

With that figure, I’m including major appliances for home functionality like a hot water heater, furnaces, and air conditioning units. I’m not including appliances that we directly use, so I’m excluding things like a washer and a refrigerator.

Costs add up all the time. The larger your home is, the more likely it is that something will break. The more expensive per square foot your home is, the greater the cost will be when something goes awry. 1% really does match my experiences.

Q8: Piracy and frugality
How do you feel about using software like Bittorrent to download movies for entertainment for free?

– Vince

Basically, my feeling is that if a group of people put in the effort to create a piece of entertainment that’s compelling enough for me to want to spend the time to watch it or read it or listen to it, then I owe those people something unless they choose to give it to me. If they made the decision to give it away, that’s fine.

The usual retort relies on the idea that most of the money goes to “big corporations,” as if those corporations do nothing. While I would far rather give my money directly to a creator, the person that created the work chose to make it available using the resources of that corporation. If I don’t like that package, then I move on. It’s not as if there aren’t many, many, many, many other books or movies or things to fill my time.

If a creative work is compelling enough for me to spend the time to watch it, then I feel that I should compensate the people who created it. If I don’t like the price, then I’ll find something else to watch.

Piracy feels like you’re slapping the people who created that movie/book/album/television show in the face, at least to me. They poured a lot of effort into making something cool and you’re just taking it? By doing that, you’re saying that creative effort – and all of the equipment and talent behind it – is worthless. I don’t like that.

If you want to read a book or watch a movie for free, go to the library.

Q9: Good and Cheap
Have you seen Leanne Brown’s free Good and Cheap cookbook? What did you think of it?

– Donna

Awesome. That’s what I think of it.

It’s a great collection of relatively simple low-cost recipes laid out very nicely and given away for free. That’s incredibly cool. Obviously, it’s not going to have recipes for the latest haute cuisine, but if you’re just looking for a great resource for tasty and inexpensive food ideas, this is pretty much perfect.

You should really go check it out. The link goes straight to the free PDF file.

Q10: Evolution of Simple Dollar design
Was the brand, mainly logo and website, done by a professional since day one, or was their a re-branding phase?

– Stephen

The initial design of The Simple Dollar, which lasted from 2006 to 2012, was entirely my own creation. I made the logo and the layout and I chose the color scheme.

In 2012, the site was redesigned with a new logo that somewhat matches the cover of my book. That design was done by a professional web designer, but relied on elements of my previous design that were carried forward.

I have a fondness for the original logo, but that’s mostly a matter of personal pride.

Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. Iíll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

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